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Better news from the bank sector spurs on Footsie

For a change the relentless tide of bad news in the bank sector gave way to relief today as Barclays confirmed it planned to raise £4.5bn at only a modest discount to the current share price.

 A group of Middle East and Far East investors are backing the deal with existing shareholders also able to give it more cash at 282p a time, if they choose. The shares are up over 5%, and this could potentially be an important turning point for the stock, so we will be watching the buying volumes closely today. Together with rises in HBOS, Alliance & Leicester and Royal Bank of Scotland, this has helped the FTSE 100 index to a 27 point rise mid-morning.

In the same sector we saw a big rise in Bradford & Bingley yesterday, and the shares are up again on a report it is close to agreeing to open its books to Resolution. It looks like the board will convene a meeting in coming days at which they will grant Resolution due diligence on the same terms as TPG, the American buyout firm, so again here there could effectively be a floor under the price.

Over in the pub sector, the recent big falls prompted Punch Taverns to bring forward its trading update to last night. It said its balance sheet was strong, business performance was in line with expectations and it remained confident of meeting full year profit expectations. As expected the shares rose along with peers Enterprise Inns and Mitchells & Butlers, but we would like to see a confirmed higher low before changing our longer term bearish stance here.


Head of Research at Blue Index, specialists in trading Contracts For Difference
25/06/2008

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